YOUNG COUPLE SEEKS FINANCIAL STRATEGY

Betty and Barney Young are a good example of what are known as young upwardly mobile professionals (Yuppies). They hope to increase that upward mobility through reduction of expenses and devising an investment and savings strategy.

Barney Young, 32, works as a computer technician for a Dade County corporation and earns $37,000 a year. Betty, 30, has a fledgling antique business and has worked part-time in a brokerage, where she earned $5,000 last year.

The couple anticipates a yearly income of $41,000, have a $70,000 home, two late-model cars, and own six acres in rural North Carolina that includes a house bringing in $150 a month in rent. Barney Young has started saving for retirement with an Individual Retirement Account and a 401(k) plan. Under the latter plan, he can put up to 10 percent of his salary in a 401(k) account and his employer matches it with another 5 percent.

The advisers commended the couple for the investment steps they have already taken, but offered advice on expenses, property, investments and employement.

One concern is that the couple could not explain where all their expenditures are going. Certified financial planner Helen Kirshenbaum of Raymond, James & Associates Inc. suggested that the Youngs and people in similar positions track all expenses for six months so they can see where the money is going and use that information to set a budget.

Another major concern was what to do with the land in North Carolina, which the Youngs purchased for $15,000 but have had appraised for $30,000.

Several of the advisers recommended selling the property and looking into limited real estate partnerships, in which investors pool money into properties that have professional management.

Adviser Jean Helen Fiedler, a certified financial planner with Laventhol & Horwath, said she thinks land values in North Carolina have peaked, which means now would be the time to sell.

Certified financial planner Brian Sheen, president of Sheen Investment Management Group, said he advises buying property in economically depressed areas, including Illinois and Michigan, where prices are low and bargains can be found.

Sheen also questioned whether Barney Young wanted to remain an employee or become self-employed. Young said construction would be an enjoyable way to make money, but Sheen said Young could triple his salary by becoming a computer consultant.

The advisers also noted that Betty Young's antique business could be a source of tax advantages, such as taking a deduction on use of a room in the couple's home for the business.

However, since there haven't been any sales yet, the couple was cautioned that a business must show a profit in three out of seven years to be considered more than a hobby and qualify for tax advantages.

Because Betty Young also is thinking about going back to school, the advisers said she might think about working somewhere part-time that would help pay her tuition. That would also enable her to fund her own IRA.

From my experience, land in North Carolina has peaked. According to all the projections, the population growth is still coming toward the Sunbelt and Florida. And, where you have population growth, you have land value appreciation.

What I would do is try to get some income-producing property, like a duplex or apartment complex. Take the cash you have available from this (the North Carolina property.) Then you figure out what your cash out would be, your mortgage payments, your maintenance and taxes. Then you try to match that with your rental incomes so that you have your down payment as the investment, your cash in equals your cash out and use depreciation to produce a tax loss.

If you think this (North Carolina) is the most beautiful place in the land and want to live there, that is fine. With a new airport opening (30 miles away) you can get in on the ground floor of growth in the area.

I think you (Betty Young) should work enough to put the $2,000 into an IRA (Individual Retirement Account.) You have so many years to go until retirement, if you want to go for growth, go for it. If you have to take funds out there is a penalty, but you have 60 days to roll it over -- take the money out and return it to an IRA account without being penalized. If you have not funded your IRA for this year, you can take $2,000 out of your old IRA and put it in your new IRA.

You should think about starting your own business. You can get out of your firm, become a consultant to that firm and earn three times what you are being paid. Take the risk now before you have kids.

It used to be people only created wealth through real estate. Now people create money through computer stores. With what you would be paid, I think you will make a lot more than in real estate. Use other people to think for you in real estate partnerships. I like to buy very low and advise buying outside Florida in depressed areas like Michigan and Illinois.

I advise an Individual Retirement Account in participating mortgages which have been generating a 12 to 14 percent cash flow. Some can get 20 percent.

Get a copy of the book Think and Grow Rich by Napoleon Hill. It was published in 1949 but it's still one of the best.

In mutual funds, look at performance not no-load versus load. For part of your investment, consider a gold mutual fund such as Fidelity Select Metal. We have to believe in our lifetime a bank collapse is a possibility, so consider investing in some Austrian coronas or Canadian maple leafs. You don't want to be left standing outside the bank not being able to get any of your money.

I can't account for the difference between what your expenses are and your income. What I suggest for people with W2 (payroll) income is that they pay everything by check for six months and then we do an analysis to see where that money goes. Then we can set up a budget.

You started in a position that's not bad because you already bought some property. In your IRA accounts, some of the limited real estate partnerships have growth.

There is nothing wrong with what you are doing -- it's all growth oriented.

You (Betty Young) should buy insurance on yourself. Disability is usually what we look for at your age because the chance of dying of any other means than an accident is slim and none.

On that property, have you thought about swapping it? There may be something you can do to not have to recognize the gain for tax purposes.

On zero-coupon bonds, I would not go in for 30 years -- maybe 15, I would. It's very safe and what you are doing is buying something that maybe you are paying five cents on the dollar. The whole concept of it is that I don't have $10,000 to invest now, but would like to have $10,000 coming to me 20 years from now. If you put in a few dollars now, they will guarantee you get a certain amount back later on. The only problem is you don't know what those dollars will be worth later on.